Strength of the Move in Supply and Demand Zones

Odd Enhancer 1: Strength of the Move

The first odd enhancer looks at the strength of the move out of the basing structure. In other words, we look at how the price left the supply or demand zone. Was it a strong move or a weak move?

A strong move has long big candles and sometimes gaps are formed as price leaves the zone.

A weak move has many small candles and the drop or the rally doesn’t go far from the zone itself.

On the chart below, the price left the supply zones with strong bearish candles to the downside making them very strong zones to trade. This shows how great the imbalance is in these supply zones.

Now, let’s take a look at an example where the move out of the base zone is weak. The demand zone is considered weak because the price left the zone with small candles.

The move out of the demand zone is weak. We should avoid trading weak zones because the price will ignore them and keep going.

Using this odd enhancer, we can give a maximum score of 2 points.

In this example, we have a supply zone where price left the zone with strong big candles. This zone shows a high probability of success because of the strength of the move out of the basing structure.

The score we’ll give to this supply zone is 2 points.

Notice how the price dropped when it returned to test the zone.

The next chart shows a weak supply zone where price left the supply zone with weak and small candles. This shows how the imbalance is at this price level.

Weak departure means that no more unfilled orders are left to be traded and the sellers are losing interest in selling at this price level. Soon, they will be outnumbered by buyers that will take control of the market and move prices higher beyond this supply zone.